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POST UTME CRAWFORD UNIVERSITY 2018 Economics | Objective

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Question 1

A firm operating under a perfectly competitive market structure faces a downward-sloping demand curve. If the firm's marginal revenue (MR) curve intersects its average total \cost (ATC) curve at point E, where MR = ATC, what is the firm's optimal price?

Correct A. \( P = \frac{MC}{epsilon} \)

B. \( P = \frac{MC}{eta} \)

C. \( P = MC \)

D. \( P = \frac{MC}{mu} \)

Correct Answer: A

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Question 2

A monopolist faces a demand curve given by \( Q_d = 100 - 2P \). If the firm's marginal revenue (MR) curve is given by \( MR = 200 - 2P \), what is the firm's optimal price?

A. \( P = 50 \)

Correct B. \( P = 75 \)

C. \( P = 100 \)

D. \( P = 120 \)

Correct Answer: B

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Question 3

A firm's production function is given by \( Q = 10L^{\frac{1}{2}}K^{\frac{1}{2}} \). If the firm's input prices are \( w_L = 10 \) and \( w_K = 20 \), what is the firm's optimal input combination?

A. \( L = 10, K = 20 \)

B. \( L = 20, K = 10 \)

Correct C. \( L = 5, K = 5 \)

D. \( L = 20, K = 20 \)

Correct Answer: C

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Question 4

A government imposes a tax of ₦100 on a firm's output. If the firm's supply curve is given by \( Q_s = 100 + 2P \), what is the firm's new supply curve?

A. \( Q_s = 100 + 2P - 100 \)

Correct B. \( Q_s = 100 + 2P + 100 \)

C. \( Q_s = 100 + 2P \)

D. \( Q_s = 100 - 2P \)

Correct Answer: B

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Question 5

A firm's \cost function is given by \( C = 100 + 20L + 10K \). If the firm's revenue function is given by \( R = 200L + 300K \), what is the firm's profit function?

A. \( pi = 100 + 20L + 10K \)

B. \( pi = 200L + 300K \)

Correct C. \( pi = 100 + 20L + 10K - 200L - 300K \)

D. \( pi = 100 + 20L + 10K + 200L + 300K \)

Correct Answer: C

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Question 6

Suppose a country's export price index increases by 10% while its import price index decreases by 5%. What will be the effect on the country's balance of payments?

A. The country's trade deficit will increase.

Correct B. The country's trade surplus will increase.

C. The country's trade deficit will decrease.

D. The country's trade surplus will decrease.

Correct Answer: B

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Question 7

A monopolist faces a demand curve given by Q = 100 - 2P and a \cost function C(Q) = 10Q + 100. What is the profit-maximizing price and quantity?

Correct A. P = 40, Q = 30

B. P = 50, Q = 25

C. P = 60, Q = 20

D. P = 70, Q = 15

Correct Answer: A

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Question 8

A central bank increases the reserve requirement for commercial banks. What will be the effect on the money supply?

A. The money supply will increase.

Correct B. The money supply will decrease.

C. The money supply will remain unchanged.

D. The money supply will increase in the short run but decrease in the long run.

Correct Answer: B

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Question 9

A firm faces a total revenue function given by TR = 100Q - 2Q^2. What is the price elasticity of demand at Q = 20?

A. 0.5

B. 1

Correct C. 2

D. 3

Correct Answer: C

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Question 10

A country's GDP is given by the equation GDP = C + I + G + \( X - M \). If the country's GDP is 100, consumption is 30, investment is 20, government sp\ending is 15, exports are 25, and imports are 10, what is the value of the trade balance?

A. 5

B. 10

C. 15

Correct D. 20

Correct Answer: D

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Question 11

If a consumer's income increases from ₦100,000 to ₦120,000 and the price of a good increases from ₦50 to ₦60, what is the new budget constraint equation in terms of x (quantity of the good) and y (quantity of the composite good)?

A. \( 120,000 - 60x - 20y = 0 \)

B. \( 100,000 - 50x - 20y = 0 \)

Correct C. \( 120,000 - 50x - 20y = 0 \)

D. \( 100,000 - 60x - 20y = 0 \)

Correct Answer: C

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Question 12

A firm's production function is given by Q = 2L + 3K, where Q is the quantity produced, L is the number of labor units, and K is the number of capital units. If the firm has 5 labor units and 3 capital units, what is the quantity produced?

A. 10

B. 12

Correct C. 15

D. 18

Correct Answer: C

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Question 13

A consumer's indifference curve is given by the equation u(x, y) = 2x + 3y, where u is the utility level, x is the quantity of good X, and y is the quantity of good Y. If the consumer's income is ₦100 and the prices of good X and good Y are ₦20 and ₦30 respectively, what is the consumer's optimal bundle?

A. (2, 1)

Correct B. (3, 2)

C. (4, 3)

D. (5, 4)

Correct Answer: B

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Question 14

A firm's \cost function is given by C(L, K) = 2L + 3K, where C is the total \cost, L is the number of labor units, and K is the number of capital units. If the firm has 5 labor units and 3 capital units, what is the total \cost?

A. ₦15

B. ₦18

Correct C. ₦20

D. ₦22

Correct Answer: C

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Question 15

A consumer's budget constraint is given by the equation 20x + 30y = 100, where x is the quantity of good X and y is the quantity of good Y. If the consumer's income is ₦100 and the prices of good X and good Y are ₦20 and ₦30 respectively, what is the consumer's optimal bundle?

A. (2, 1)

Correct B. (3, 2)

C. (4, 3)

D. (5, 4)

Correct Answer: B

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Question 16

A firm's total revenue is given by the equation TR = 100x - 2x^2, where x is the number of units sold. If the firm sells 20 units, what is the total revenue?

A. ₦1000

Correct B. ₦1200

C. ₦1800

D. ₦2000

Correct Answer: B

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Question 17

A consumer's utility function is given by U(x,y) = 2x + 3y, where x and y are the quantities of two goods consumed. If the consumer's income is ₦1000 and the prices of the two goods are ₦5 and ₦3 respectively, what is the optimal bundle of goods?

Correct A. (10, 10)

B. (20, 20)

C. (30, 30)

D. (40, 40)

Correct Answer: A

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Question 18

A monopolist's demand curve is given by Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the firm's marginal \cost is ₦10, what is the optimal price?

A. ₦20

B. ₦30

Correct C. ₦40

D. ₦50

Correct Answer: C

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Question 19

A firm's \cost function is given by C(x) = 100 + 2x^2, where x is the number of units produced. If the firm produces 10 units, what is the total \cost?

A. ₦200

B. ₦300

Correct C. ₦400

D. ₦500

Correct Answer: C

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Question 20

A consumer's budget constraint is given by 2x + 3y = 100, where x and y are the quantities of two goods consumed. If the consumer's utility function is U(x,y) = 2x + 3y, what is the optimal bundle of goods?

A. (10, 10)

Correct B. (20, 20)

C. (30, 30)

D. (40, 40)

Correct Answer: B

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Question 21

A firm's \cost function is given by C(q) = 2q^2 + 10q + 5. If the firm's revenue function is R(q) = 20q, what is the profit-maximizing quantity of output?

A. 5

Correct B. 10

C. 15

D. 20

Correct Answer: B

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Question 22

A monopolist faces a demand curve given by P = 100 - 2q. If the firm's marginal \cost is MC(q) = 10, what is the monopolist's profit-maximizing quantity of output?

A. 20

Correct B. 30

C. 40

D. 50

Correct Answer: B

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Question 23

A consumer's utility function is given by U(x, y) = 2x + 3y. If the consumer's budget constraint is 10x + 5y = 50, what is the consumer's optimal bundle of x and y?

A. x = 2, y = 5

Correct B. x = 3, y = 4

C. x = 4, y = 3

D. x = 5, y = 2

Correct Answer: B

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Question 24

A government imposes a tax of ₦10 per unit on a firm's output. If the firm's supply curve is given by Q = 2P - 10, what is the new supply curve after the tax is imposed?

A. Q = 2P - 20

Correct B. Q = 2P - 15

C. Q = 2P - 10

D. Q = 2P + 10

Correct Answer: B

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Question 25

A consumer faces a budget constraint of ₦100. If the consumer's indifference curves are given by U(x, y) = 2x + 3y, what is the consumer's optimal bundle of x and y?

Correct A. x = 20, y = 30

B. x = 30, y = 20

C. x = 40, y = 10

D. x = 50, y = 0

Correct Answer: A

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